Thu, 29 Jan 2009

The problem here is simple: credit is scarce because nobody wants to lend and nobody wants to buy. Why not? Because the Federal Government is threatening to borrow and spend a TRILLION DOLLARS. If you are bank, would you sell your product if you knew that an A-grade customer was going to be spending a TRILLION dollars soon? Of course not. Even if they choose not to buy from you, the price of lending is going to go up. It can't help but go up, not when a TRILLION dollar buyer is showing up. So nobody is lending now.

And nobody is buying anything now. Why would you? You want to be positioned correctly for the TRILLION dollars which is going to enter the market soon. You don't want to invest your money in something, only to find that the market has shifted and your investment is toast.

The failout is not the solution to our problems. It is the CAUSE of our problems, merely by being threatened. Why is this not obvious to everyone?

I wonder if Paul Krugman has borrowed huge amounts of money and spent it already? If he hasn't done it, then why should we? If he doesn't trust his own theory for his own household, then why should we trust his theory for our country?

The answer is that of course he hasn't done that, because his theory requires that many people behave differently than each person. And yet when the many are made up of individuals, how can that be?

Tue, 27 Jan 2009

Human beings are relative people. Everything we do, everything we feel,
everything we think, is relative to other things we do, feel, or think.
Your perception of hot and cold is relative to the most
recent thing you felt. The Exploratorium
has an excellent demonstration of this. They have a heated pipe, a cooled
pipe, and a pipe at room temperature. You grab the heated with your left hand,
the cooled with your right, and then the pipe at room temperature. It feels
cool with your left hand, but warm with your right hand even though it's the
same temperature. You cannot absorb a new concept unless you have a way
to relate it to other things you know.

In order for new creative things to have any meaning, they must relate
in some way to existing things. Rap artists explicitly include
snippets of other music in their works. Musicians use the twelve-tone system,
not because it is intrinsically correct, but because it is familiar.
Non-western cultures use microtones in-between the twelve, and they handle
that just fine.

In order for new things to have value, they must be built on top of the
old things. If copyright were perpetual (and currently nothing has gone
out of copyright in Mickey Mouse's entire lifetime -- and he's already
pushing the average lifespan of an adult male), then the value of old
things would be going up, up, up. This reduces the incentive to create
new things, because the new things create demand for the old things, which
decreases the available compensation to pay for the new things.

Science Fiction authors have explored the dynamics of perpetual life,
and there seems to be a consensus that it is mortality which drives the
creative process: create or die, because otherwise you'll just die.

Mon, 19 Jan 2009

I still haven't heard anybody put forth a good case for exactly WHY a
bailout -- or indeed any government intervention in the economy -- is
needed. People will say "Oh, well, free markets can't solve problem X"
and then go on to propose a government solution which nobody is sure will
solve the problem. I'm like "what the hell?? You say that free markets
CAN'T solve the problem, but you don't know how governments can solve
the problem and that becomes a problem with free markets??"

Sat, 03 Jan 2009

I'm sad to report the death of my friend, Jack Powelson. Quite frankly,
he is responsible for saving me from the hell that is socialist economics.
I could see that socialism didn't really provide the goods for people,
and that capitalism did, but I felt that a good Quaker was a socialist
Quaker. Jack pointed me to a way out: good economics really is
concern for the poor.